Simon helped his client expand quickly with Funding Circle

Efficient business finance

Simon Clarke, Director at Claratus Commercial Finance, joined the Funding Circle introducer family in September 2015. He told us, ‘Flexibility and speed of response make Funding Circle a valuable part of our funding panel. Their approach to doing business is transparent, efficient and effective.’

SimonClaratus

Simon was able to help his client move quickly

Late last year, Simon was asked by Finch House, an award-winning and established cafe and fine food store in Tonbridge, to arrange a finance facility which would cover the cost of fitting out their new cafe in Orpington, Kent. The team at Finch House had spent many months identifying the best site and when one became available on the high street, speed was of the essence.

To fit out the new shop, including catering equipment, furniture and air conditioning, Finch House borrowed £125,000 back in December 2015. Since completing the new cafe, Finch House has gone from strength to strength and were recently recognised as the number one hospitality and catering business at Orpington’s Finest Awards.

In this short video meet Simon, hear his experience of working with Funding Circle and why providing clear upfront pricing is so important:

Find out how we might be able to help your clients access fast and flexible finance by calling our dedicated Business Development team on 020 3667 2208 or send us an email.

We’ve hit £1.5 billion | Weekly Lending Review

Week 38: 19 – 23 September

You and other investors have helped lend a fantastic £1.5 billion to British businesses. Thank you for your continued support!

Record amount of loans listed on the marketplace

There are currently 20 loan requests on the marketplace, and thousands of loan parts available for you to buy which will help you become diversified.

The total value of new loans listed on the Funding Circle marketplace was a record-breaking £22,072,860, averaging at £70,198 per loan. The largest loan value was £646,360 and the smallest loan value was £5,000.

Business loans available to bid on:

Gross interest rates are before fees and bad debts. Your actual return may be higher or lower as by lending to businesses, your capital is at risk.

Weekly marketplace trends

These graphs show the most recent activity on the marketplace.

The average gross yield graph is reported weekly and shows a rolling two week average of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn (The calculation is AGY = (1 + (two week rolling weighted average rate/12))^12 – 1). You can view the latest gross interest rates accepted on the marketplace on our statistics page.

Weekly average gross yield (2 weeks rolling)

WLR 38 yield

Number of loans, value of loans and amount lent are reported weekly.

Number of listed loans per week

WLR 38 loans listed

Listed loan value per week

WLR 38 loan value

Total amount lent

WLR 38 amount lent

Loan parts available to buy from other investors

WLR 38 loan parts

Brandscape: the cryptic puzzle from Funding Circle

Ready for a challenge? Find 60 global brands in this cryptic puzzle to become a BrandscapeMaster. To start you off we will give you one clue for free. We may have included ourselves…

brandscape

Oktoberfest: Raise a glass to these 4 glorious breweries!

Whether you’re heading to Oktoberfest or just fancy a pint, toast your friends and family with a special something from this list of Funding Circle borrowers.

Loans defaulted last week

Manufacturer. Loan 1980. Risk band B

This Hampshire business has been running since 1999 and is three months in arrears.

Restaurant. Loan 9177. Risk band C

This Yorkshire business was established in 2008 and the borrower has ceased trading.

Event support specialists. Loan 9423. Risk band A

This Buckinghamshire business has been running since 2006 and is three months in arrears.

Care home. Loan 9987. Risk band B

This Merseyside business was established in 2008 and is three months in arrears.

Manufacturer. Loan 5313. Risk band A+

This West Yorkshire business has been running since 2006 and is three months in arrears.

Restaurant. Loan 17320. Risk band C

This Manchester business was established in 2011 and is being placed into liquidation.

Game developers. Loan 21601. Risk band A

This Essex business has been running since 2010 and is three months in arrears.

Ceiling specialist. Loan 18214. Risk band A

This Manchester business was established in 2011 and is four months in arrears.

Shop. Loan 6321. Risk band B

This West Lothian business is three months in arrears.

Pet shop. Loan 9585. Risk band B

This Essex business has been running since 2003 and was placed into administration in September 2016.

Hotel. Loan 3279. Risk band C

This Nottinghamshire business was established in 2005 and was placed into liquidation in July 2016.

Marketing agency. Loan 15020. Risk band A

This London business has been running since 2007 and has been dissolved.

Jewellers. Loan 2074. Risk band C

This Surrey business was established in 2005 and was placed into liquidation in September 2016.

Web developers. Loan 23045. Risk band B

This Hampshire business has been running since 2012 and is being placed into liquidation.

Physiotherapist. Loan 13029. Risk band A

This Hampshire business was established in 2012 and is being placed into liquidation.

Kitchen manufacturer. Loan 4522. Risk band B

This Hampshire business has been running since 2007 and was placed into administration in September 2016.

Shop renovators. Loan 15165. Risk band D

This Kent business was established in 2012 and has become unresponsive after missing repayments.

Benefits of diversification

Lending to businesses can deliver attractive returns, while helping businesses access the finance they need to grow. However, from time-to-time some businesses will be unable to repay their loan, which is why lending a small amount to lots of different businesses is so important. Watch our 90 second diversification video below to find out more. Remember, by lending to businesses your capital is at risk.

Our collections and recoveries team are working to recover the outstanding amounts for all of the loans described above and they will provide you with updates in the loan comments section on your summary page. Read how our collections and recoveries process works (part one and part two) on our blog.

Enjoy lending, the Funding Circle team

 

Oktoberfest: Raise a glass to these 4 glorious breweries!

Cheers! Prost! Salute! Toast your friends with exceptional beer this year to celebrate Oktoberfest. Ignite your taste buds and try something new with our recommended selection of pale ales, dark ales and lagers – all from fantastic businesses across the UK that have flourished thanks to Funding Circle investors.

1. Hackney Brewery

Hackney Brewery was established in 2011 to bring top-quality, locally-produced beer to the thirsty drinkers of London. The brewery produce a range of beers including a Golden Ale, an American Pale Ale and a fruity Raspberry Kristallweizen – brewed with real berries! In order to buy a new fermenter and increase production, Hackney Brewery borrowed £30,000 from 451 investors. We visited the team last year to see their new fermenter in action.

Screen Shot 2016-09-26 at 14.16.08

2. Leeds Brewery

Leeds Brewery, founded by two university friends, first opened its doors in 2007 and since then has become the largest brewery in Leeds. Using only the finest possible ingredients, the brewers produce an array of unique beers such as Monsoon Pale Ale, Gingerbread Stout and our autumn favourite, American Pumpkin Ale. To help with working capital, Leeds Brewery have borrowed £250,000 across 3 loans from 981 investors.

3. Ashridge Cider

Fancy a refreshing cider instead? Ashridge Cider brew a lovely selection of organic ciders such as an Elderflower cider, a Devon Blush and their famous Sparkling Vintage Brut Cider which was featured on the Daily Telegraph’s ‘50 Foods to Try Before you Die’ list! In order to invest in a new cider mill and press to keep up with growing demand, Ashridge Cider has accessed £86,000 from Funding Circle.

Screen Shot 2016-09-26 at 17.53.06

4. Roosters

And finally, born in 1993, Roosters Brewery is run by a father and his two sons in beautiful Yorkshire. Having invested in their own canning line in 2014, the company now stock their beer in casks, kegs, bottles and cans for their customers to enjoy. Whether you prefer a pale ale, an IPA, or something a bit different such as their traditional coffee porter, Rooster’s have a beer to suit you. Due to the growing popularity of their products, Rooster’s Brewery borrowed £150,000 across 2 loans to help meet this demand.

Are you interested in lending to businesses like these?

Lend alongside 50,000 investors and support small businesses across the UK by signing up online today.

You can use our investor information guide to help you get started and there are thousands of loans which you can be a part of, making it quick and easy to build a diversified portfolio. Remember, by lending to businesses your capital is at risk.

Looking to expand your business?

We’ve helped more than 15,000 businesses access finance for a range of finance needs, including hiring staff and opening new shops. Get your instant quote today.

Enjoy lending. The Funding Circle team

You’ve helped lend over £1.5 billion to British businesses!

Stop press. We’ve hit £1.5 billion lent to British businesses!

It was after 5 years, 4 months and 10 days we celebrated hitting £1 billion lent, and just 9 months later we’re at £1.5 billion! Thank you for your continued support.

Butchers, bakers and candlestick makers

You and other investors have helped more than 16,000 businesses across the country, from Daron’s bakery in Kent to Candy’s doggy day care in Suffolk, access the finance they need to grow and prosper. Log in to view current lending opportunities on the marketplace.

You are making a real difference to the UK economy

Independent research published by the Centre for Economics and Business Research (CEBR) revealed that since launching in 2010, Funding Circle investors, like you, have helped create over 40,000 jobs, build approximately 2,200 family homes, like Forth Homes in Merseyside, and boost economic activity (measured by GVA) by £2.7 billion. You can download the full report here or read about the impact your lending is having on the UK economy below:

small_business__big_impact_infographic

Interested in lending to British businesses?

Lend alongside 50,000 investors and support small businesses across the UK by signing up online today. You can use our investor information guide to help you get started and there are thousands of loans which you can be a part of, making it quick and easy to build a diversified portfolio. Remember, by lending to businesses your capital is at risk.

The Funding Circle team

Take 10: How to use Facebook advertising and best practice (part two)

Quick and simple ways to boost your business in just 10 minutes

For the fifth in our Take 10 series, we’re looking at Facebook advertising, how it works and how it can help drive traffic to your website.

Continuing from part one

In part one, we focused on how to set up and get started using Facebook advertising, where businesses pay to target customers with a specific message. There’s a huge opportunity for businesses to target potential customers on Facebook, as it’s the most established social media advertising tool with 1.13 billion active users.

Once you’ve set up your advertising account, there are hundreds of items you could consider and test. However, we’d suggest focusing on targeting, bidding and testing to get you started.

Use common interests to target potential customers

It’s important to fine tune who you’re targeting with your advert, as users browsing on Facebook lack the intent you might experience on Google adverts, for example. This is because on Google, users are normally searching a specific keyword, whereas on Facebook, potential customers might see your advert amongst their News Feed which is filled with information from friends and family. This is why creating eye catching adverts is a must!

When you set up your advertising account, there’s a list of targeting criteria to choose from, including any items users ‘like’ on Facebook, from food and drink to activities and brands. You can think about the common interests among your customers and target these segments, or if you own customer data you can upload this to Facebook to create a lookalike audience to target.

For example, Funding Circle borrower Suffolk Canine Creche could target dog owners within a certain radius of their premises in Woodbridge, or Facebook users that look like their current customers.

Make the most of your budget with a clear bidding strategy

A bidding strategy helps you decide how to spend your budget so your advert the best chance of success, whether that’s more visits to your website or increased brand awareness. Depending on your objective and budget there are 3 main bidding strategies you could use.

  • CPM will help you increase brand awareness: If you’re looking to spend a specific budget and increase your brand awareness, then choose CPM (cost per 1000 times an advert is shown to users – this is known as ‘impressions’). It’s important to remember, though, that you’re paying for quantity, not quality.
  • CPC will help you drive traffic to your website: Use cost per click (CPC) to ensure that you’re only charged when a customer clicks through to your website. You can choose the amount you’re happy to pay for each lead using this method.
  • Use oCPM to target 100,000 customers: When looking for ultimate efficiency, and only really on audiences larger than 100,000, we think the best strategy to use is optimised cost per 1000 impressions (oCPM). This method means Facebook will display your advert to users who they believe are most likely to click through to your website.

Test to understand which advert works best

Do lots of testing! Once you’ve created a captivating advert and chosen your target audience, it’s important to constantly test different content, messaging and landing pages to ensure you’re always improving.

While you’re getting started, we’d suggest refreshing your advert once a week so your audience don’t tire of the same content, but try not to make changes too frequently. Give yourself time to understand the metrics and whether the advert has been successful.

Top tip: To measure the impact of your adverts, and specifically how many people are clicking through to your website, add a Google Analytics tracking code to your URL. For example, if you were the Suffolk Canine Creche looking to target users that look like your current customers with an image of a Labrador you might use:

https://www.example.com/?utm_source=Facebook&utm_medium=Advert&utm_campaign=LookalikesSept2016&utm_content=Labrador

The link includes unique identifiers, such as ‘Labrador’ and ‘LookalikesSept2016’ in the example above, which are sent to your Analytics account to help you identify which adverts are most effective in attracting potential customers. Google Analytics have created a handy step by step guide to help.

We hope you’ve found this post useful. Come back for the next instalment of Take 10, where we’ll be looking at how to manage time effectively.

The Funding Circle team

 

Brandscape: the cryptic puzzle from Funding Circle

Ready for a challenge?

In the landscape below you will find cryptic clues for 60 globally recognised brands and companies. To become a Brandscape GrandMaster, all you have to do is guess what they are.

Some clues are really very simple – can you see the apple? Some however, are extremely hard. If you get stuck you can tweet us @FundingCircleUK and we’ll try to give you a helping hand.

brandscape image

How to play Brandscape

1.Go to www.fundingcircle.com/uk/featured/brandscape

2.Click “play the game”

3.Use your mouse to find each clue

4.Click on a clue and take your guess

Using your mobile?

controls brandscape

Use the white controls in the top right to zoom in and move around on your phone. Tap the image to find your clues.

Saving your progress is easy

Save your progress by logging into Facebook, which will also allow you to complete the game on different devices.

We hope you enjoy it – ready, set, play!

The Funding Circle team

Enjoyed this? Play the Brilliant Minds quiz and see how you compare against the world’s best business brains.

5 back to school businesses | Weekly Lending Review

Week 37: 12 – 16 September

Whether you’re getting stuck back into schoolwork, starting a new job or just need a boost to carry you into Autumn, our back to school list including new stationery, books and a cookery school, is here to help.

New loans available to you

There are currently 9 loan requests on the marketplace, and thousands of loan parts available for you to buy which will help you become diversified.

The total value of new loans listed on the Funding Circle marketplace was £15,889,020 averaging at £69,708 per loan. The largest loan value was £523,820 and the smallest loan value was £5,000.

Business loans available to bid on:

Gross interest rates are before fees and bad debts. Your actual return may be higher or lower as by lending to businesses, your capital is at risk.

Weekly marketplace trends

These graphs show the most recent activity on the marketplace.

The average gross yield graph is reported weekly and shows a rolling two week average of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn (The calculation is AGY = (1 + (two week rolling weighted average rate/12))^12 – 1). You can view the latest gross interest rates accepted on the marketplace on our statistics page.

Weekly average gross yield (2 weeks rolling)

WLR 37 Yield

Number of loans, value of loans and amount lent are reported weekly.

Number of listed loans per week

WLR 37 loans listed

Listed loan value per week

 WLR 37 loan value

Total amount lent

 WLR 37 amount lent

Loan parts available to buy from other investors

WLR 37 loan parts

Are you taking advantage of our refer a friend promotion?

If you recommend a friend to Funding Circle, and they lend £1,000 to businesses by the end of October, you could lend to British businesses on us as you’ll both earn £50 cashback paid into your accounts. Terms and conditions apply.

Loans defaulted last week

Plastics specialist. Loan 1460. Risk band B

This Cornwall business has been running since 1997 and is 4 months in arrears.

Care home. Loan 8210. Risk band C

This Kent business was established in 2005 and has become unresponsive after missing repayments.

Hairdresser. Loan 6680. Risk band C

This London business has been running since 2010 and is 4 months in arrears.

Online retailer. Loan 17754. Risk band B

This Middlesex business was established in 2010 and has been placed into liquidation.

Building restorer. Loan 14412. Risk band C

This Northamptonshire business has been running since 2002 and was placed into liquidation in January 2016.

Construction company. Loan 11199. Risk band C

This Leicestershire business was established in 2011 and is being placed into liquidation.

Scaffolding specialist. Loan 19899. Risk band A+

This Staffordshire business has been running since 2003 and was placed into liquidation in August 2016.

Sales company. Loan 18912. Risk band A

This Glasgow business was established in 2010 and is being placed into liquidation.

Car showroom. Loan 9110. Risk band A

This West Yorkshire business has been running since 2009 and is being placed into liquidation.

Software specialists. Loan 15115. Risk band A

This Gloucestershire business was established in 2011 and the borrower has decided not to take the funds.

Accountant. Loan 17089. Risk band A

This North Yorkshire business has been running since 2005 and has proposed a Company Voluntary Arrangement.

Manufacturer. Loan 15068. Risk band A

This Hampshire business was established in 2000 and was placed into administration in September 2016.

Engineer. Loan 10945. Risk band A

This West Midlands business has been running since 1977 and has been placed into administration.

Sweet manufacturer. Loan 6980. Risk band C

This Kent business was established in 2011 and is being placed into liquidation.

Benefits of diversification

Lending to businesses can deliver attractive returns, while helping businesses access the finance they need to grow. However, from time-to-time some businesses will be unable to repay their loan, which is why lending a small amount to lots of different businesses is so important. Watch our 90 second diversification video below to find out more. Remember, by lending to businesses your capital is at risk.

Our collections and recoveries team are working to recover the outstanding amounts for all of the loans described above and they will provide you with updates in the loan comments section on your summary page. Read how our collections and recoveries process works (part one and part two) on our blog.

Enjoy lending, the Funding Circle team

 

Funding Circle partners with ActionCOACH, the World’s #1 Business Coaching firm

We’re delighted to announce our new partnership with ActionCOACH, the World’s #1 Business Coaching firm, to help even more businesses access fast and flexible finance.

ActionCOACH specialise in small business advice

Founded in 1997, ActionCOACH advise thousands of small businesses every week, on how to get more time to finding the best employees, and more money on their bottom-line.

Seminars on business success across the country

Throughout November, Brad Sugars, credited with teaching people around the world how to make millions, is hosting seminars from Southampton to Glasgow and many locations in between. The seminar is aimed at business owners who want to take their business to the next level and turn their goals into reality. Find out more and book your tickets for the seminar series here. Tickets start from just £20 (using code HQPMO at the checkout)!

Partnerships & Funding Circle

We believe signposting alternative finance providers from trusted brands will help to raise the profile of the options available to business owners, and bring more lending opportunities to the 50,000 Funding Circle investor community.

Our National Partnerships Manager Dan Sinclair-Taylor said, ‘Thousands of businesses have already benefited from accessing fast and flexible finance through Funding Circle, and we’re delighted to partner with ActionCOACH to help even more businesses across the UK grow and prosper.’

This partnership follows our agreements with Santander and RBS.

The Funding Circle team

Back to school: 5 ideas to kickoff the new academic year

No dreary back to school feelings here. As the summer months come to a close, get ready for the brand-new school year with our back to school list. From new stationery, to books and a cookery school, your lending has helped these creative UK businesses grow and prosper.

papermash

1. Stationery

Head back to school or the office in style with unique notebooks, pens and planners from Papermash. Choose from an array of beautiful prints, such as the bright and whimsical designs of US designer, Anna Bond. To increase their stock and add brand-new items to their popular online shop, Papermash borrowed £5,000 back in 2014.

2. Books

Stock up on a selection of new books to help kick-start your September at Browsers Bookshop. The bookshop, based in Suffolk, carries a wide range of history, biography and business-insight books – whatever you may need to help you flourish in your studies. Browsers Bookshop were able to fit out a new space in their shop to expand their collection of books after borrowing £12,500 from 248 investors.

bookshelf01

3. Children’s books

Are your little ones starting school this year? Get them excited to start learning with Kids IQ Books’ excellent selection of educational books, including sciences, mathematics and foreign languages. In order to add new stock to their shop, Kids IQ Books borrowed £52,000 through Funding Circle. With all those new books you’ll have, Tidy Books make the perfect book boxes to keep them neat and organised. To help with international expansion and growth, the company borrowed £64,000 across 2 loans.

4. Bags

If you’re child is joining sports teams this year, make sure to grab them a trendy new rucksack from Sporty Kids Wear, who launched their website after borrowing £10,000 in 2014. Or you could look at fashionable book bags from The Stripes Company – their Pointe Tote Bag is not only the perfect size for all day-to-day school supplies, it looks great too! The Stripes Company were able to expand their product range using their Funding Circle loan.

Screen Shot 2016-09-15 at 09.38.57

5. Cookery school

And finally, September doesn’t always have to be all about the kids, it could also be the perfect time to join that cooking class you’ve had your eye on. With over 40 cookery courses to choose from to suit beginners as well as experienced cooks, Ashburton Cookery School will help you take your skills to the next level. To expand their facilities in order keep up with the growing popularity of their courses, Ashburton Cookery School borrowed £175,000 across 2 Funding Circle loans.

Are you interested in lending to businesses like these?

Lend alongside 50,000 investors and support small businesses across the UK by signing up online today.

You can use our investor information guide to help you get started and there are thousands of loans which you can be a part of, making it quick and easy to build a diversified portfolio. Remember, by lending to businesses your capital is at risk.

Enjoy lending. The Funding Circle team

 

Ready, set, bake! | Weekly Lending Review

Week 36: 5 – 9 September

Last month, we visited award-winning cafe and bakery, Finch House, in Kent. Take a tour of the new shop, which 1,800 Funding Circle investors helped fit out, and meet business owner Daron in this short video.

New loans available to you

There are currently 6 loan requests on the marketplace, and thousands of loan parts available for you to buy which will help you become diversified.

The total value of new loans listed on the Funding Circle marketplace was £13,672,680 averaging at £60,705 per loan. The largest loan value was £381,480 and the smallest loan value was £5,000.

Business loans available to bid on:

Gross interest rates are before fees and bad debts. Your actual return may be higher or lower as by lending to businesses, your capital is at risk.

Weekly marketplace trends

These graphs show the most recent activity on the marketplace.

The average gross yield graph is reported weekly and shows a rolling two week average of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn (The calculation is AGY = (1 + (two week rolling weighted average rate/12))^12 – 1). You can view the latest gross interest rates accepted on the marketplace on our statistics page.

Weekly average gross yield (2 weeks rolling)

WLR 36 yield

Number of loans, value of loans and amount lent are reported weekly.

Number of listed loans per week

WLR loans listed

Listed loan value per week

WLR 36 loan value

Total amount lent

WLR 36 amount lent

Loan parts available to buy from other investors

WLR 36 loan parts

News you should know

Last week, we announced the appointment of Eric Daniels, former Chief Executive of Lloyds TSB with over 40 years’ experience in global banking and financial services, to the Funding Circle Board.

Are you taking advantage of our refer a friend promotion?

If you recommend a friend to Funding Circle, and they lend £1,000 to businesses by the end of October, you could lend to British businesses on us as you’ll both earn £50 cashback paid into your accounts. Terms and conditions apply.

Loans defaulted last week

Multimedia agency. Loan 19331. Risk band C

This East Sussex business was established in 2013 and is 3 months in arrears.

Design consultancy. Loan 4886. Risk band C

This Surrey business has been running since 2008 and is proposing a Company Voluntary Arrangement.

Health and safety specialist. Loan 8169. Risk band B

This Aberdeenshire business was established in 2001 and was dissolved in August 2016.

Jewellery business. Loan 5875. Risk band A+

This Leicestershire business has been running since 1966 and is being placed into liquidation.

Creative agency. Loan 10698. Risk band C

This London business was established in 2006 and has proposed a Company Voluntary Arrangement.

Shop. Loan 8249. Risk band A

This Perthshire business has been running since 2004 and has become unresponsive after missing repayments.

Mechanics. Loan 10664. Risk band A

This Devon business was established in 2005 and has been placed into liquidation.

Letting agency. Loan 9107. Risk band D

This London business has been running since 2011 and has become unresponsive after missing repayments.

Double glazing specialist. Loan 17779. Risk band D

This Glasgow business was established in 2003 and is being placed into liquidation.

Creative agency. Loan 11763. Risk band A  

This Dorset business has been running since 2010 and is being placed into a Company Voluntary Liquidation.

Manufacturer. Loan 2681. Risk band B

This Midlothian business was established in 2009 and is 4 months in arrears.

Benefits of diversification

Lending to businesses can deliver attractive returns, while helping businesses access the finance they need to grow. However, from time-to-time some businesses will be unable to repay their loan, which is why lending a small amount to lots of different businesses is so important. Watch our 90 second diversification video below to find out more. Remember, by lending to businesses your capital is at risk.

Our collections and recoveries team are working to recover the outstanding amounts for all of the loans described above and they will provide you with updates in the loan comments section on your summary page. Read how our collections and recoveries process works (part one and part two) on our blog.

Enjoy lending, the Funding Circle team

Digging into the data: What could happen to your returns in an economic downturn?

At Funding Circle our aim is to build a stable and sustainable platform, where you can earn predictable returns by lending to creditworthy businesses. Following the recent referendum result for the UK to leave the European Union, you may have questions about the impact any future economic uncertainty might have on your returns.

We have always made preparations to be well-equipped to weather periods of economic uncertainty, and wanted to share the results of a recent stress test we conducted.

What do we mean by ‘stress test’?

Stress tests are an integral part of any financial organisation’s risk management strategy as they provide estimates around what might happen in an economic downturn. We first conducted a stress test in 2014 to simulate what could happen to investor returns during a particularly stressed period, or recession. A recession is characterised by a sustained period ‒ typically two consecutive quarters ‒ of negative GDP growth.

What did we do?

At Funding Circle we have an experienced team of credit and risk analysts, who have many years of experience working at some of the world’s leading banks and financial institutions. Leveraging historical data available to us from leading credit reference agencies and our own database of over 15,000 UK businesses, we were able to apply a number of stressed scenarios to an example of a typical investor portfolio, to analyse the potential impact on investor returns.

Methodology

The starting point for our stress test was to create an example portfolio, and to review how we expected those loans to perform if the UK economy remained stable. To broadly reflect the proportion of loans that have been originated over the last 12 months, we tested an example portfolio made up of:

  • 70% unsecured small business loans
  • 30% secured property loans

We estimated that these loans would deliver a 7.2%* annual return after fees and losses during a stable economic environment. By conducting rigorous stress testing, we were able to simulate what would happen to these returns should the UK economy enter a period of recession.

What data did we use?

As part of our stress test, we analysed a number of factors including macroeconomic indicators and specific indicators relevant to both small business loans and property loans.

Small business loans

1) Insolvency rate

When building the model we used data from the Insolvency Service, which shows the rate at which businesses are unable to pay their debts. This is known as the insolvency rate. Looking at the graph below showing the insolvency rate of UK businesses during the 2007-08 recession, you can see that the insolvency rate was two times (2.0x) higher at the peak of the recession in 2009 than it was in 2016.

Insolvency

Source: The Insolvency Service

We used this insight to guide our understanding for what the default rate for small businesses could increase by at Funding Circle during a recession. We also investigated specific segments of small businesses that share the characteristics of Funding Circle borrowers (such as turnover, trading length and number of employees) and found that for those businesses the increase in insolvency rate was actually 1.6x during the same period – suggesting less volatility than the average market. By examining the average age of Funding Circle borrowers, we could also confirm that the majority (56%) successfully traded through the last recession.

2)Timing and duration of a recession

Two other important factors we considered when estimating the impact of a stressed scenario on small business loans were the timing and duration of a recession.

Typically, defaults on a group of loans start to occur approximately six months after loans are made. This trend then naturally decreases over time from the second year. In addition, all of the small business loans amortise as borrowers pay back a proportion of their principal along with interest each month. Both factors are likely to reduce the severity of a recession that would start later, on existing loans.

Amortisation

The age of a group of loans at the time a recession occurs influences the magnitude of the financial impact. Therefore we have stress-tested both the existing book of loans, which are less exposed due to being partially matured, and an example portfolio of brand new loans, which are potentially fully exposed to recessions through their entire lifetime.

Property loans

Property loans are secured against properties. The major factor we considered when assessing the impact of any stressed scenario on property loans is a fall in the value of house prices. The graph below shows that during the 2007-8 recession, house prices across the UK fell by an average of 19% over 18 months.

HPI

To understand risks on this portfolio, house price fluctuations have to be compared with the loan-to-value (LTV) ratio, or the value of each secured property against the amount borrowed. The below chart shows the distribution of loans by loan-to-value bands for outstanding Funding Circle property loans. Data is correct as of 31st August 2016.

LTVWe looked at what would happen to the property portfolio if house prices fell by either 10%, 20% or 30%. Outside of our base estimated default rate of 0.5% a year for property loans, in the mildest scenario (10% fall in house prices) investors would be unlikely to experience an increase in defaults as the loan-to-value on any of the property loans does not exceed 85%.  Even in an extreme scenario where house prices fell by 30%, we estimated that the majority of the outstanding property loans would be well-placed to weather a recession.

Our stress test scenarios and results

For the first scenario, we simulated a recession similar to the one experienced in 2008. The second scenario was based on data from the Prudential Regulation Authority (PRA), where we applied a number of macroeconomic changes provided by the PRA to simulate a recession significantly more severe than experienced in 2008. For both scenarios we also anticipated that the recovery rate on defaulted loans would decrease by 33% during the stressed period.

Taking the estimated annualised net return of 7.2%* in our base case as a starting point, the results were as follows:

results

The existing example portfolio is likely to be resilient in both scenarios. New loans are also likely to be resilient, although with lower returns due to the timing impact. Also, in the case of a major recession, Funding Circle would take action to mitigate losses ‒ with such benefits not factored into this simulation.

We have a number of processes in place to help anticipate and react to worsening economic conditions. We monitor, with a lot of scrutiny, both the internal performance of our loanbook and external macroeconomic conditions. Looking at factors including changes to Gross Domestic Product (GDP), income gearing (how much income there is available for a business to service debt), Consumer Price Inflation (CPI) and the overall insolvency rate for UK businesses, we should be able to identify when a downturn may be approaching.

If there were indications that economic conditions were worsening, or that our loanbook was not performing as well as it should be, we would adjust our credit assessment process to price in some of the effects of an incoming downturn on new loans. You can read more on how we assess businesses on our blog.

Remember

 

Conclusion

These results show that investor returns are likely to remain attractive even in a recession deeper and longer-lasting than was experienced in 2007-08. We’re committed to helping investors earn attractive returns by building a stable and sustainable platform, and are confident this would remain the case even during the most adverse of downturns. Diversifying, where you spread your lending across lots of different businesses, can help your portfolio be more representative of the wider pool of loans we have tested. You can find out more about this here.

We hope you’ve found the above information useful, and you can read more about the performance of Funding Circle loans on our statistics page. If you have any questions please don’t hesitate to get in touch.

Enjoy lending,

The Funding Circle team

* Estimated returns are after fees and bad debts but before tax, and please remember by lending your capital is at risk. As you lend to your own individual portfolio of loans, your actual return may be higher or lower than our estimates. You can see how we calculate our estimated annual return at origination here.

A Great British Bakery: a new award-winning cafe and bakery in Kent

Last month, we visited Finch House cafe and bakery in Kent. The award-winning fine food shop first opened on Tonbridge High Street and following two successful years of trading, business owner Daron Goldfinch opened a second shop in Orpington earlier this year.

The cafe prides itself on using locally sourced ingredients and creating all their products in house, including the best selling salted caramel brownie. And, at the end of the day if there’s any leftover it’s given to the homeless.

Bakery cakes

Over a delicious cheese toastie, another firm favourite, Daron told us that the original shop was set up in such a way that the concept could be rolled out further. Daron has an established reputation in the industry after his active involvement with Konditor & Cook as well as working with a number of other coffee shops providing concept, design and implementation strategies. Finch House hope to open a third and fourth shop in Kent and Sussex soon.

To fit out the new shop, including catering equipment, furniture and to air conditioning, Finch House borrowed £125,000 from more than 1,800 investors back in December 2015. When looking for finance, Daron consulted Simon Clarke at Claratus Commercial Finance, who, recognising the funds were required in a short time frame, helped Finch House secure a suitable business loan through Funding Circle.

In this short video meet business owner Daron, find out his highlights and take a tour round the new cafe and bakery:

Are you interested in lending to businesses like Finch House?

Lend alongside 50,000 investors and support small businesses across the UK by signing up online today. You can use our investor information guide to help you get started and there are thousands of loans which you can be a part of, making it quick and easy to build a diversified portfolio. Remember, by lending to businesses your capital is at risk.

Do you have clients who need finance?

Our dedicated team work with hundreds of introducers every day, including commercial finance brokers, financial advisors, corporate partners and accounts. Register as an introducer with Funding Circle today.

Funding Circle announces new Non-Executive Board Member

Today we’re very pleased to announce the appointment of Eric Daniels to the Funding Circle Global Board as a Non-Executive Director.

Daniels has over 40 years’ experience in global banking and financial services. He began his career with Citibank where he spent 25 years and held a number of key managerial positions across a range of businesses and countries. In 2001, he joined Lloyds and was appointed to the Board as Group Executive Director with responsibility for the retail banking division. He became Chief Executive of Lloyds TSB in 2003 before retiring in 2011.

Commenting on today’s news, Samir Desai, CEO and founder of Funding Circle said: “When we first launched Funding Circle our vision was to create the infrastructure – similar to a stock exchange or bond market – where individuals, financial institutions and governments could all lend to creditworthy small businesses. Eric’s deep experience and knowledge of global financial services will be integral to us as we continue to work towards fulfilling this vision”.

Speaking about his appointment, Eric Daniels said: “I’ve been hugely impressed by what the team at Funding Circle has achieved over the last six years. Their commitment to helping small businesses across the world to access the finance they need to grow is bold and exciting. I’m looking forward to working with the team as we continue the next stage of our growth”.

Alongside his role at Funding Circle, Daniels also holds a number of other senior advisory positions. He is Principal and Senior Adviser at Stormharbour, Senior Adviser to CVC Capital Partners, Non-Executive Director at Russell Reynolds Associates, Board Member of the Smithsonian Tropical Research Institute and a Trustee of the Smithsonian UK Charitable Trust.

The announcement marks another important step for Funding Circle, and you can read the full press release here.

The Funding Circle team

£2.7 billion boost to the UK economy. August industry news

Newspapers - Copy

How small firms are increasingly turning away from traditional lenders for funding

Last month, research published by the Centre for Economics and Business Research (CEBR) revealed that since Funding Circle launched six years ago, you and other investors have helped to create jobs, build homes and support regions that have faced economic hardship in the wake of the last financial crisis. To date, your committed support has helped to boost the UK economy by an estimated £2.7 billion, helping to create an estimated 40,000 new jobs across the country. Learn more about the positive impact you’re having on our blog.

Small housebuilders are the answer to the housing crisis. Here’s how we can help them

Just as small businesses are critical to the success of the British economy, so too are small housebuilders. Large housebuilders on their own are unable to keep up with the rising shortfall of dwellings across the country. In order to fill this gap, it’s crucial that small developers have adequate access to finance, yet they continue to struggle to access funding through traditional channels. Direct lending platforms are helping to alleviate this problem by matching these developers directly with investors. Research shows that to date, investors at Funding Circle have helped to build over 2,200 homes across the UK, proving the huge potential for platforms to facilitate lending to the residential construction sector.  Similar themes were also covered in Guardian.

Dinosaur banks have some fleet-footed rivals

The financial world has no doubt changed over the past decade; high street banks are unable to help the vast number of businesses in need of finance, opening the door to a proliferation of innovative technology start-ups. By cutting out the traditional middle man and linking supply directly with demand, direct lending platforms have allowed investors to earn positive returns, whilst creating thousands of new jobs across the country. This journalist has lent through the major platforms for a number of years and discusses his experience in detail. Remember, by lending to businesses your capital is at risk.

Cash, peer-to-peer, shares and bonds

Following the Bank of England’s recent decision to lower the base rate, this piece looks at some of the savings and investment options available to those who are looking to make their money work harder. As always, a diversified portfolio is the recommended approach in this Telegraph piece. To learn more about what diversification means for you at Funding Circle, take a look at our blog or read more about this topic in The Times.

14 cool apps to help you budget, save money, and invest

And finally, Business Insider has rounded up some of the best apps and services available right now that can help you do everything from sending money around the world, to applying for a mortgage online. At Funding Circle, we are very pleased to announce this month that the new and refreshed iPad app is available to download for free from the App Store! The app allows you to keep track of your account more easily and find information quickly with our simplified navigation tool. More details on in this post.

News

We’re back on TV! | Weekly Lending Review

Week 35: 29 August – 2 September

Last week, we launched our new 30 second TV advert. Watch it now online or keep your eyes peeled for it over the next few weeks!

New loans available to you

There are currently 7 loan requests on the marketplace, and thousands of loan parts available for you to buy which will help you become diversified.

The total value of new loans listed on the Funding Circle marketplace was £9,094,520 averaging at £63,136 per loan. The largest loan value was £392,980 and the smallest loan value was £5,000.

Business loans available to bid on:

Gross interest rates are before fees and bad debts. Your actual return may be higher or lower as by lending to businesses, your capital is at risk.

Weekly marketplace trends

These graphs show the most recent activity on the marketplace.

The average gross yield graph is reported weekly and shows a rolling two week average of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn (The calculation is AGY = (1 + (two week rolling weighted average rate/12))^12 – 1). You can view the latest gross interest rates accepted on the marketplace on our statistics page.

Weekly average gross yield (2 weeks rolling)

WLR 35 yield

Number of loans, value of loans and amount lent are reported weekly.

Number of listed loans per week

WLR 35 loans listed

Listed loan value per week

WLR 35 loan value

Total amount lent

WLR 35 Amount lent

Loan parts available to buy from other investors

WLR 35 loan parts

Loans defaulted last week

Air conditioning specialists. Loan 14298. Risk band A

This Essex business has been running since 2001 and is being placed into liquidation.  

Caterers. Loan 6271. Risk band C

This Hampshire business was established in 2004 and was placed into liquidation in June 2016.

GP surgery. Loan 4932. Risk band C

This West Sussex business has been running since 2012 and is proposing a Partnership Voluntary Arrangement.

Garage. Loan 8876. Risk band A

This Shropshire business was established in 1913 and is 4 months in arrears.

Equipment supplier. Loan 16109. Risk band A+

This Aberdeenshire business has been running since 2010 and was placed into administration in August 2016.

Print cartridge wholesaler. Loan 11122. Risk band B

This London business was established in 1994 and has ceased trading.

IT disposal specialist. Loan 9031. Risk band C

This Flintshire business has been running since 2010 and has become unresponsive after missing repayments.

Gym. Loan 13263. Risk band B

This Nottinghamshire business was established in 2012 and is being placed into liquidation.

Painters and decorators. Loan 16292. Risk band A

This Surrey business has been running since 2005 and is being placed into liquidation.

Interior designers. Loan 10477. Risk band D

This Dorset business was established in 2002 and is being placed into liquidation.

Decorators. Loan 10325. Risk band D

This London business has been running since 2006 and has ceased trading.

Steel manufacturer. Loan 16065. Risk band C

This Manchester business was established in 1992 and is being placed into liquidation.

Outdoor space designers. Loan 2369. Risk band B

This Shropshire business has been running since 2002 and is being placed into liquidation.

Printers. Loan 17096. Risk band B

This Yorkshire business was established in 2010 and is being placed into liquidation.

Restaurant. Loan 3615. Risk band D

This Leeds business has been running since 2005 and is being placed into liquidation.

Hotel. Loan 2815. Risk band C

This Powys business was established in 2006 and is 4 months in arrears.

Marketing agency. Loan 11891. Risk band D

This Yorkshire business has been running since 2010 and is being placed into liquidation.

Corporate events specialist. Loan 5860. Risk band B

This Aberdeenshire business was established in 2006 and is proposing a Company Voluntary Arrangement.

Benefits of diversification

Lending to businesses can deliver attractive returns, while helping businesses access the finance they need to grow. However, from time-to-time some businesses will be unable to repay their loan, which is why lending a small amount to lots of different businesses is so important. Watch our 90 second diversification video below to find out more. Remember, by lending to businesses your capital is at risk.

Our collections and recoveries team are working to recover the outstanding amounts for all of the loans described above and they will provide you with updates in the loan comments section on your summary page. Read how our collections and recoveries process works (part one and part two) on our blog.

Enjoy lending, the Funding Circle team

Lend to 100s of businesses through Funding Circle | Weekly Lending Review

Week 34: 22 – 26 August

Last week, your lending helped 208 UK businesses access more than £14 million to grow and prosper. Of the new loans listed, the South East was the most popular business location, and property & construction was the most popular sector.

New loans available to you

There are currently 4 loan requests on the marketplace, and thousands of loan parts available for you to buy which will help you become diversified.

The total value of new loans listed on the Funding Circle marketplace was £15,111,120 averaging at £70,206 per loan. The largest loan value was £460,480 and the smallest loan value was £5,000.

Business loans available to bid on:

Gross interest rates are before fees and bad debts. Your actual return may be higher or lower as by lending to businesses, your capital is at risk.

Weekly marketplace trends

These graphs show the most recent activity on the marketplace.

The average gross yield graph is reported weekly and shows a rolling two week average of gross yields. This calculation assumes you reinvest your interest each month and therefore includes the compound interest you earn (The calculation is AGY = (1 + (two week rolling weighted average rate/12))^12 – 1). You can view the latest gross interest rates accepted on the marketplace on our statistics page.

Weekly average gross yield (2 weeks rolling)

WLR 34 yield

Number of loans, value of loans and amount lent are reported weekly.

Number of listed loans per week

WLR 42 loans listed

Listed loan value per week

WLR 34 loan value

Total amount lent

WLR 34 amount lent

Loan parts available to buy from other investors

WLR 34 loan parts

Loans defaulted last week

Consultants. Loan 12168. Risk band A+

This West Midlands business has been running since 2010 and has become unresponsive after missing repayments.

Engineers. Loan 7526. Risk band A+

This Cheshire business was established in 2011 and is 3 months in arrears.

Printed fabric converter. Loan 4159. Risk band D

This London business has been running since 2004 and was placed into liquidation in December 2015.

Builders. Loan 17762. Risk band A

This West Sussex business was established in 2013 and is being placed into liquidation.

Strategic support. Loan 13022. Risk band A

This Oxfordshire business has been running since 2006 and is being placed into liquidation.  

Travel agent. Loan 8575. Risk band A+

This London business was established in 2012 and is being placed into liquidation.  

Garage. Loan 3958. Risk band D

This Monmouthshire business has been running since 2014 and was made bankrupt in August 2016.

Recruiters. Loan 10280. Risk band B

This Berkshire business was established in 2005 and is being placed into liquidation.

Sustainable development specialist. Loan 11046. Risk band A

This London business has been running since 2010 and was placed into liquidation in August 2016.

Online retailer. Loan 7971. Risk band B

This Middlesex business was established in 2010 and is being placed into liquidation.

Electrician. Loan 18421. Risk band B

This North Yorkshire business has been running since 2012 and is being placed into liquidation.

Motor business. Loan 17614. Risk band E

This Essex business was established in 2001 and was placed into administration in July 2016.

Steel manufacturer. Loan 6764. Risk band B

This Lancashire business has been running since 1984 and has become unresponsive after missing repayments.

Lending to businesses can deliver attractive returns, while helping businesses access the finance they need to grow. However, from time-to-time some businesses will be unable to repay their loan, which is why lending a small amount to lots of different businesses is so important. Watch our 90 second diversification video below to find out more. Remember, by lending to businesses your capital is at risk.

Our collections and recoveries team are working to recover the outstanding amounts for all of the loans described above and they will provide you with updates in the loan comments section on your summary page. Read how our collections and recoveries process works (part one and part two) on our blog.

Enjoy lending, the Funding Circle team